MacKay Shields Launches Securitized Income ETF

Investment manager MacKay Shields has introduced a new exchange-traded fund (ETF) focused on asset-backed securities, mortgage bonds, and other investment-grade products in the structured finance market.

IQ MacKay Securitized Income ETF

Owned by insurer New York Life, MacKay Shields launched the IQ MacKay Securitized Income ETF on May 31. The actively managed fund currently holds assets worth $86 million as of the latest data.

Goal and Strategy

Zachary Aronson, a portfolio manager at MacKay Shields, stated, “The goal is to provide investors with diverse exposure in an asset class that offers attractive yields while maintaining high-quality credits.” The fund will also include collateralized mortgage obligations and commercial mortgage bonds in its portfolio.

Liquidity Concerns in Structured Finance Markets

Structured finance markets, except for agency mortgage-backed securities, have historically faced liquidity challenges. This liquidity issue can pose a challenge for ETF fund managers when investors seek to redeem their shares, as finding buyers can be difficult. Despite this, more ETFs are venturing into this space.

Increasing ETF Presence

Last year, the market witnessed the launch of 11 new ETFs, including offerings from BlackRock Inc. and DoubleLine Capital LP. This growth is partly attributed to the Securities and Exchange Commission’s regulatory reforms in 2019, which streamlined the process of bringing ETFs to market.

Popularity of ETFs in Collateralized Loan Obligations

ETFs have gained popularity in collateralized loan obligations (CLOs), with Janus Henderson’s single ETF amassing assets worth over $10 billion. This trend showcases the growing investor interest in ETFs within the structured finance market.